by This week has brought dark news for Aussie fans of instant gratification. MilkRun, the popular 10-minute grocery delivery app, announced to its staff that it was retiring and that they would all be made redundant. Founder Dany Milham, formerly of Koala mattresses, attributed its sudden failure to deteriorating “economic and capital market conditions.”
It was not an isolated event, nor particularly unpredictable. MilkRun’s collapse followed the death of a number of companies including Send, Voly and Quicko, all of which offered much the same product and faced exactly the same problems. MilkRun was the smartest and most capitalized of them all, but he couldn’t beat the odds.
The advertised startup was built from the ground up as an Australian riff on the global “instant grocery” craze, which came at the end of the latest tech boom. Like its global forebears, like Jokr, Getir, and Gopuff, MilkRun made a simple promise: groceries, delivered by bike courier in 10 minutes or less, at a pretty reasonable price.
Related: Grocery delivery startup MilkRun collapses, blamed on economic conditions
To accomplish this incredible logistical feat, the company created a network of tiny warehouses, called ‘dark shops’, throughout Australia’s inner-city enclaves, which were stocked with a select range of goods and acted as ultra-fast hubs for a growing armada of knight bikes.
The company and its hapless competitors were talking to a new generation of grocery customers worn out by other near-instant indulgences like Netflix, Amazon and Uber Eats, and no longer trained to observe the quasi-religious ritual of the “weekly shop.” . Its painfully millennial marketing, where newly supported Suburbs were launched as limited edition Nike drops: Bondi! Erskineville! Brunswick! Collingwood! — clarified exactly the yuppie set he was targeting.
It made perverse sense, at least in an investor presentation. Evolving consumer habits, amplified by Covid, had in theory spawned the kind of person who wouldn’t bat an eyelid at paying a markup to have something delivered quickly. Some instant food startups envisioned a brave new world where no one would ever need a fridge or pantry again, because everything could be stocked at the touch of a button.
If all of this sounds too good to be true: well, it was. Although instant food startups have absorbed a huge amount of invested money in recent years, with few exceptions they have struggled to create sustainable businesses. It’s a hard and capital-intensive game, and there’s no compelling evidence that the model actually works, even if it’s highly attractive to a particular type of consumer.
In June of last year, the Sydney Morning Herald reported that MilkRun was burning through $13 per order at one of its most successful locations, no longer promising 10-minute delivery and was making a stronger spin on alcohol delivery to keep up. the gravy train in motion. It did not work. As Coles and Woolworths expanded their delivery offerings to compete, steadfastly refusing to make the outlandish promises of instant grocery new arrivals, the writing was on the wall for MilkRun.
But the real story here isn’t so much the failure of an Australian company as the end of a global era. After the shocks of the financial crisis, the world went through a prolonged period of low interest rates, where money was virtually free and large amounts of capital poured into unusual ports in search of a return.
That investment environment helped create our contemporary world and the various tech startups that underpin it, but it also created a long-term unsustainable bubble of companies.
Related: Pandemic is yet another wake-up call that all Australian workers must have sick leave | Matt Grudnoff
This era of speculative investing came to an abrupt halt with post-Covid inflation soaring, as interest rates soared and investors grew tired of financing businesses that didn’t even hint at profitability. When Milham talks about “economic conditions and the capital market,” he hints that the era of loose money is dead before MilkRun could find his feet and fix his business model (that is, if ever could).
For those who came of age in the 2010s, the end of this era has created a hangover. Our lives have been mediated by on-demand platforms and services of dubious long-term viability but which have been propped up, like zombies, by investors ready and willing to foot the bill with the promise of a comeback somewhere over the horizon .
The golden age of the so-called “millennial lifestyle subsidy” could be said to have found its pinnacle in something like the MilkRun, which promised – for one brief, brilliant moment – the hedonistic pleasure of having a cyclist who deliver a single Cadbury Creme Egg from across your suburb for a nominal fee.
MilkRun and its legion of suitors are long gone and Australians will wake up to the chilling reality that they may have to wait more than 60 minutes for groceries. But damn, we did it right.
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James Hennessy is the co-host of the Down Round podcast and writes The Terminal, a newsletter on tech culture
